Fiona is keen to take advantage of her uncle’s offer
but is unsure whether she can raise such a large
amount of money by the end of September. She
phones her uncle to find out whether she can have
until after Christmas to pay. Her uncle is away at
a conference and so Fiona leaves a message with
his secretary. Two weeks pass by and, as Fiona
has not heard from her uncle, she arranges a loan
with her bank. On 28 September she writes to her
uncle accepting his offer and enclosing a cheque
for £15,000. On 30 September, her uncle phones
to say that he has already sold the equipment to
someone else.
Advise Fiona.5 Lynx Cars Ltd, the manufacturer of a revolutionary
fuel-efficient small car, enters into a five-year
dealership agreement with Roadstar Ltd, a
northern-based company of car dealers, in
November 2008. A clause in the agreement states:
‘This agreement is not intended to be legally
binding but the parties honourably pledge that
they will carry out its terms.’ Roadstar Ltd places
an initial order for 2,000 cars to be delivered by
the end of 2009, which is accepted by the
manufacturer. One month after the successful
launch of the car at the Motor Show, Lynx Cars
Ltd writes to Roadstar Ltd informing it that, owing
to production difficulties, the company estimates
that it will be able to deliver only 200 cars by
the end of 2009. It further states that it will be
withdrawing from the dealership agreement from
the end of 2009 to be able to concentrate its
resources on its south of England car dealers.
Advise Roadstar Ltd.6 Mrs Harris, the owner of three rented houses in
Extown, asks her next-door neighbour, Ted, to
collect rent from the tenants for her while she is
abroad on business. Ted collects the rents and
when Mrs Harris returns she says to him, ‘I’ll give
you £50 for your work.’
Can Ted enforce the promise?7 John, a plumber, installs a new bathroom for
Mr and Mrs Bolton for an agreed price of £500.
Five weeks after sending the bill John still has
not received payment. He rings the Boltons and
speaks to Mrs Bolton. She says that she is
unhappy about the quality of John’s work, whichshe claims is only worth £350 at most. She also
tells John that her husband has just lost his job
and they can only afford to pay £100. John
reluctantly agrees to accept a cheque for this
amount ‘in full settlement’.
Three months later John hears that Mr Bolton is
back in employment and he wonders whether he
can recover the outstanding money.8 Jeremy, a prosperous City trader, decides to pay
for his parents, Bill and Irene, to go on holiday
to celebrate their silver wedding anniversary.
Jeremy enters into a contract with Sunset Cruises,
to provide his parents with a deluxe cabin for a
two-week cruise round the Caribbean. Bill and
Irene are very disappointed with their holiday.
As a result of a booking error by Sunset Cruises,
they are not allocated a deluxe cabin. The ship’s
engines suffer a mechanical failure on the third
day and, as a result, the ship does not visit all
the islands on its scheduled itinerary. Bill and
Irene wish to take action against Sunset
Cruises.
Advise them.
How would your advice differ if Jeremy took
action on behalf of his parents?9 What formalities, if any, must be completed for the
following contracts?
(a)a guarantee for a bank overdraft;
(b)the sale of a second-hand car;Privity of contract
(d)the lease of a house for 21 years;
(e)a promise to pay £50 a year for the next five
years to a charity.10 Kathy, aged 17, decides to leave home because
she does not get on with her parents. Over the next
three weeks she enters into the following
agreements:
(a)She borrows £500 from her older brother to tide
her over until she can find a job.
(b)She takes a two-year lease on a bed-sit, paying
three months’ rent in advance.
(c)By pretending to be 21, she orders a £700
suite of furniture from Palatial Pads Ltd on
12 months’ interest-free credit.
(d)She sets up a home catering business and
immediately agrees to cater for 100 people
attending a 21st birthday party for a price of
£500. She insists on £100 deposit. As the dayPart 3Business transactions